A 1099 form is one of the forms that are a ubiquitous part of taxation and operating a business. There are many forms that are used to record income from employees or independent contractors. While W-2 forms are usually given to employees to list the income they have earned for the tax year, 1099 forms are typically given to independent contractors or freelancers, in which to record their income from a business or project they have handled.
People who get a 1099 MISC form are required to indicate their income though there won’t be any deductions made for federal and state income taxes. Also, there won’t be social security or medical deductions made. Since independent contractors or freelancers are not considered employees of a business or company, the business will only be required to give the income of the contractor without any deductions. This same 1099 income will be reported to the Internal Revenue Service as a way of tracking the income of freelancers. The freelancer will have the responsibility of making his own tax deductions and also give the payments to the IRS.
People who fall under the category that will require getting a 1099 form come from a wide range of occupations and disciplines. These include artists, novelists, actors, freelance writers, and people who are usually paid or gain income on a “per project” basis and are not considered as employees of the business or client. More and more businesses are realizing the benefits of hiring freelancers that’s why there’s also an increase in the usage of 1099 forms.